CENTER FOR MEDICARE DATE: TO

1 DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for MEDICARE & Medicaid Services 7500 Security Boulevard Baltimore, Maryland 21244-1850 CENTER FOR MEDICARE DATE: July 29, 2021 TO: All MEDICARE Advantage Organizations and MEDICARE Prescription Drug Plan Sponsors FROM: Meena Seshamani, MD, PhD Director, CENTER for MEDICARE SUBJECT: Annual Release of Part D National Average Bid Amount and Other Part C & D Bid Information CMS is announcing today that the Part D national average monthly bid amount for 2022 is $ , the 2022 Part D base beneficiary premium is $ , and the de minimis amount is $2.

2 Please see the attached notice for more detailed information concerning the 2022 Part D national average monthly bid amount, the MEDICARE Part D base beneficiary premium, the Part D regional low-income premium subsidy amounts, the MEDICARE Advantage (MA) regional PPO benchmarks, and MA employer group waiver plan (EGWP) regional payment rates. Detailed information regarding the de minimis amount is attached in a separate memo. The memo contains instructions and a timeline for completing rebate reallocation and volunteering to waive the de minimis amount. Plans will have from Thursday, July 29, 2021 until 11:59 PM Pacific Daylight Time on Thursday, August 5, 2021 to complete rebate reallocation.

3 Note that bids may be resubmitted for rebate reallocation multiple times prior to this deadline. Furthermore, plans will have from Friday, August 6, 2021 until 11:59 PM Pacific Daylight Time on Friday, August 13, 2021 to inform CMS of their intent to participate in the voluntary de minimis program. Thank you for the timely submissions of your bid information, and I look forward to working together. DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for MEDICARE & Medicaid Services 7500 Security Boulevard, Mail Stop N3-26-00 Baltimore, MD 21244 OFFICE OF THE ACTUARY DATE: July 29, 2021 TO: All MEDICARE Advantage Organizations and MEDICARE Prescription Drug Plan Sponsors SUBJECT.

4 Annual Release of Part D National Average Bid Amount and other Part C & D Bid Related Information Today we are releasing the 2022 Part D national average monthly bid amount, the MEDICARE Part D base beneficiary premium, the Part D regional low-income premium subsidy amounts, the MEDICARE Advantage regional PPO benchmarks, and the MEDICARE Advantage employer group waiver plan (EGWP) regional payment rates. Below we describe the determination of these amounts. The regional low-income premium subsidy amounts and the regional MA benchmarks can be downloaded from the CMS web site at: Part D National Average Monthly Bid Amount CMS has calculated the national average monthly bid amount for 2022 in accordance with section 1860D-13(a)(4) of the Social Security Act ( the Act ), codified in 42 CFR For each coverage year, CMS computes the national average monthly bid amount from the applicable Part D plan bid submissions in order to calculate the base beneficiary premium, as provided in 42 CFR (c).

5 The national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone prescription drug plan and MA-PD plan described in section 1851(a)(2)(A)(i) of the Act. The weights are based on the number of enrollees in each plan. The weight for each plan bid is a percentage calculated with the numerator equal to the number of Part D eligible individua ls enrolled in the plan in the reference month (as defined in 42 CFR (c)(1)) and the denominator equal to the total number of Part D eligible individua ls enrolled in the reference month in all applicable Part D plans.

6 Per section 1860D-13(a)(4)(A) of the Act, the calculation does not include bids submitted by MSA plans, MA private fee-for-service plans, specialized MA plans for special needs individuals , PACE programs under section 1894, any fallback prescription drug plans, and plans established through reasonable cost reimbursement contracts under section 1876(h) of the Act. The reference month for the 2022 calculation was June 2021. The national average monthly bid amount for 2022 is $ Part D Base Beneficiary Premium The base beneficiary premium is equal to the product of the beneficiary premium percentage and the national average monthly bid amount.

7 The beneficiary premium percentage ( applicable percentage ) is a fraction, with a numerator of percent and a denominator equal to 100 percent minus a percentage equal to (i) the total reinsurance payments that CMS estimates will be paid for the coverage year, divided by (ii) that amount plus the total payments that CMS estimates will be paid to Part D plans based on the standardized bid amount during the year, taking into account amounts paid by both CMS and plan enrollees. In accordance with section 1860D-13(a) of the Act, codified in 42 CFR , Part D beneficiary premiums are calculated as the base beneficiary premium adjusted by the following factors: (i) the difference between the plan s standardized bid amount and the national average monthly bid amount; (ii) an increase for any supplemental premium; (iii) an increase for any late enrollment penalty; (iv) a decrease for MEDICARE Advantage Prescription Drug Plans (MA-PDs) that apply MA A/B rebates to buy down the Part D premium.

8 And (v) elimination or decrease with the application of the low-income premium subsidy. The Part D base beneficiary premium for 2022 is $ Part D Regional Low-Income Premium Subsidy Amounts In accordance with 42 CFR , full low-income subsidy (LIS) individua ls are entitled to a premium subsidy equal to 100 percent of the premium subsidy amount. A Part D plan s premium subsidy amount is the lesser of the plan s premium for basic coverage or the regional low-income premium subsidy amount (LIPSA). The regional LIPSAs are the greater of the low-income benchmark premium amount for a PDP region or the lowest monthly beneficiary premium for a prescription drug plan that offers basic prescription drug coverage in the PDP region.

9 In accordance with section 1860D-14 of the Act and the final rule Modification to the Weighting Methodology Used to Calculate the Low-Income Benchmark Amount, published in the Federal Register (73 FR 18176) on April 3, 2008, the low-income benchmark premium amount for a PDP region is a weighted average of the monthly beneficiary premiums for basic prescription drug coverage in the region. The weight for each PDP and MA-PD plan is a percentage calculated with the numerator equal to the number of Part D LIS-eligible individua ls enrolled in the plan in the reference month and the denominator equal to the total number of Part D LIS-eligible individua ls enrolled in all PDP and MA-PD plans in a Part D region in the reference month.

10 The Patient Protection and Affordable Care Act amends the statute governing the calculation of the LIS benchmark premium amount (see section 3302, as amended by section 1102 of the Health Care and Education Reconciliation Act of 2010). As amended, section 1860D-14(b)(3)(B)(iii) of the Act requires the calculation of the weighted average premium amounts 1 As noted above, the actual Part D premiums paid by individual beneficiaries equal the base beneficiary premium adjusted by a number of factors. In practice, premiums vary significantly from one Part D plan to another and seldom equal the base beneficiary premium.